Frequent Questions About Electric Utility Restructuring

(from Maine Townsman, November 1999)
by the staff of the Maine Public Utilities Commission

EDITOR'S NOTE: The following Q & A on electric utility restructuring is provided by staff of the Maine Public Utilities Commission. The PUC is now reviewing bids on the "standard offer" for electric power in Maine. A decision is expected by early December. The TOWNSMAN will report on this important decision and other restructuring issues in next month's issue.

 What is electric restructuring all about?

For the past 80 years, a single utility company has supplied and delivered electricity to your area under the supervision of the Maine Public Utilities Commission (PUC). Beginning March 2000, Maine’s electric industry will be restructures, which means the supply portion of electric service is opening up to a competitive market. All of Maine’s residential and business consumers can choose the company that produces their electricity.

Why is restructuring happening?

The Maine Legislature has been concerned with Maine’s high electricity prices for quite some time. In 1997, efficiencies in electric generation technology prompted them to consider alternatives to the single-provider system. After studying electric restructuring in several other states, Maine passed a law opening up its electricity supply to competition. This restructuring is taking place across the nation, as states move to bring the benefits of competition to this traditional monopoly industry. Electric choice will allow electricity suppliers to compete for a share of Maine’s electricity needs. More importantly, restructuring will shift the risk of future investments in electricity generation away from the consumer and place it on the industry.

How will restructuring affect my rates?

When restructuring takes place (March 2000), the fee for electricity supply could change, depending on which new supplier you choose. The fee for delivery service will continue to be set (regulated) by the Public Utilities Commission and cannot change without their approval. While there are no guarantees that electric rates will decrease, a fully competitive market should help assure the lowest possible price.

I like my present electric company. Can I stay with them or do I have to switch?

Currently, one company provides all electricity services for homes and small businesses. It generates the electricity, sends it over transmission lines and distributes it directly to businesses and homes. With restructuring, electricity services will be divided into two categories. Present companies, such as Bangor Hydro, CMP and Maine Public Service will continue to transmit and deliver your electricity, maintain wires, read meters and restore power during an outage. But they will no longer be in the power generation business. Under Maine law, these existing companies have been ordered to sell their generation capabilities by the year 2000, to level the competitive field for electricity supply. Electricity may be supplied by companies from Maine, New England and maybe beyond.

Who will send me my bill?

Consumers and small businesses will continue receiving a monthly bill from their local distribution company. If consumers buy their electricity from a competitive supplier, they may also receive a second bill directly from the supplier. In some cases, including the Standard Offer, local distribution companies will serve as an "intermediary" between Maine consumers and electricity suppliers — in which case all charges would appear on a single bill. Billing practices could evolve further in the future, incorporating new technologies such as advanced computerized metering and billing.

Who do I call if the power goes out?

The company that provides electricity now will continue to deliver power to homes or businesses all over Maine. They will maintain wires and poles, read meters and send repair crews out during an outage. As always, keep their number near for such emergencies.

What is group buying?

The power of group buying is common in businesses from health insurance to wholesale clubs, and group buying of electricity is happening in other states where restructuring has taken place. Electric buying groups, sometimes called aggregates, benefit both the consumer and the supplier. An electricity buying group may be formed just to purchase electricity or may be an already existing group. In other states these groups have included trade associations, non-profit organizations, churches, municipalities, school districts, and Chambers of Commerce.

Effective buying groups provide much-needed information and reduce transaction costs to members. Members of the buying group may receive discounted prices, special billing services, advice on and financing for improving the energy efficiency of their homes or businesses, or power from preferred sources-such as renewable power. These benefits often mean more favorable prices and terms for group members than they can find on their own. The supplier benefits by gaining significant market share in a single deal.

Do I have to make a choice right away?

In order for your choice to be effective by March 2000, consumers and small business people will have to sign up several weeks in advance of that date. If an electricity supplier hasn’t been chosen consumers and small businesses will automatically receive the Standard Offer Service. These are the "default" electricity suppliers to ensure uninterrupted service. You can stay with the Standard Offer Service, or choose another electricity supplier at any time.

Will I get new solicitation calls from new electricity suppliers?

Consumers and small businesses may start getting information from competitive electricity suppliers a couple of months before competition begins, allowing them to compare prices and services from competitive electricity suppliers. Maine requires that suppliers comply with federal and state laws regarding telephone solicitation. They are allowed to make telemarketing calls only between the hours of 8 a.m. and 9 p.m., and must maintain a "Do Not Call" list. You may call a supplier to request that your name be added to their "Do Not Call" list, or notify them when they contact you. You may also join a national "Do Not Call" list that will block solicitation by phone from a wide variety of companies. To put your name on the national "Do Not Call" list, write to: Telephone Preference Service, Direct Marketing Association, P.O. Box 9014, Farmingdale, NY 11735-9014. Be sure to include your full name and address, and phone number with area code.

What protections will be in place to protect me from scams? Can I be switched to a new supplier without my knowledge?

With Electric Choice, consumer and business protections are built into the law. There are slamming protections in place so you can’t be switched to a supplier without your permission. Penalties will result for any company that attempts to switch a customer without authorization or deceptively obtains signatures or permission over the phone. All electricity suppliers must be licensed by the PUC, and certified as technically and financially viable. Consumers must receive written terms from their new supplier, outlining the contract. That information may include terms of service such as length of contract, average price per kilowatt-hour, switching fees and information on other services.

How do I learn more about electric restructuring?

You can call the Maine Public Utilities Commission toll free at 1-877-PUC-FACT (1-877-782-3228), or visit our consumer education website at www.pucfact.com. For specific questions about your itemized bill, please first contact your local utility company.